Government-owned
Poste Italiane has evolved into a financially profitable and technologically sophisticated conglomerate that offers an array of services to Italy's 60 million consumers. According to a 2007 Fortune Magazine report, the group’s revenues of US$21.4 billion ranked sixth in the world -- behind only Deutsche Post, the U.S. Postal Service, UPS, FedEx, and France’s La Poste. Established firms TNT, Japan Post, and Britain's Royal Mail all trailed Poste Italiane's revenues by significant margins.
The organization's success has been helped significantly by its expansion into banking, insurance, financial services, logistics, phone cards, and other competitive markets. This effort built upon Poste Italiane's network of 14,000 post offices. Traditional mail services in Italy are often slow and barely profitable -- only half the mail sent between Naples and Bologna, 360 miles away, arrives within the 1-3 day delivery window classified as "on-time." Financial services have surfaced as a crucial source of new revenue for the organization.
So far, Poste Italiane has weathered and actually benefited to some degree from the global financial crisis. The postal bank invests only in state bonds, and Italian consumers view postal savings certificates and accounts as safe havens for their cash in the wake of declining values for other types of assets. Structure
Sixty-five percent of Poste Italiane shares are held by the
Italian government's Ministry of Economics and Finance. The remainder is owned
by a government company which manages the investment of public savings (
Cassa Depositi e Prestiti
S.p.A).
Management controls a broad empire beyond mail and package
delivery. This includes business logistics, banking and internet services, insurance,
credit cards, investments, hybrid electronic document processing, and even
mobile phones.
Here is a short summary of Poste Italiane's many
subsidiaries:
BancoPosta accepts and
invests deposits.
PostePay facilitates
bill-paying.
The SDA Group provides
express mail and logistics.
Mototaxi runs city bike couriers.
Postecom operates Internet
services.
PosteVita sells a
range of insurance products.
Fondi Bancoposta Sgr handles
investments.
Postel is the European leader for hybrid electronic mail and document processing.
Poste
Italiane's Europa Gestioni Immobiliari unit engages in real-estate financing
Poste Italiane employs 46,000 postmen and about 155,000
workers in total. The workforce has shrunk since Poste Italiane became an
independent company. While government-run, the national post employed more than
200,000 workers.
In 2007, Poste Italiane delivered more than 3 billion pieces
of mail. It retains just 5 percent of the domestic package market, according to
IBM. Letter volumes are less than half EU per capita averages.
Poste Italiane reported its first overall profit in 2002 --
after fifty years of red ink as a government agency. It has reported profits in
each of the six years since.
In 2007, Poste Italiane reported that its net income was up 25
percent, to €844 million, from €676 million in 2006. That represents a 141
percent increase in profit in just two years. The group reported revenue from
postal services of €5.5 billion and from financial services of €4.5 billion in
2007. Both represented increases in revenue from the previous year.
Nevertheless, some analysts believe Poste's profits are
tenuous. Just 200 customers are responsible for 20 percent of Poste Italiane's
revenues.
Liberalization
In 1998, in response to the general EU schedule for gradual
liberalization of national postal markets, Italy
converted its traditional
national post into a public limited company. The new share company evolved
rapidly.
In 1999, Priority Mail service was introduced, and in 2000, Poste
Italiane implemented a broad plan to upgrade post offices.
Poste Italiane still maintains a monopoly on letter mail
below 50 grams, as do many other European posts. The EU has directed that
postal markets in member states must be liberalized by 2011. The target date
for full liberalization has been postponed several times, and Italy has taken
full advanteage by refusing to liberalize its market ahead of schedule.
Poste Italiane has received government support during the
transition to a liberalized postal marketplace. In 2006, for example, the
Italian government removed the standard 45-cent letter from Poste's product
offerings. Since then, every letter sent via Poste must be sent as "post
prioritaria" at a cost of 60 eurocents.
Competition
Licenses have been granted to 1,600 mail operators for a
market that includes some 900 million pieces of mail outside the monopoly,
which is currently in effect for letters weighing less than 50 grams. Given
Poste Italiane's historial unreliability, many consumers embraced the entrance
of independent operators into the delivery market in the 1990s. Nevertheless,
the postal market is relatively non-transparent, and the monopoly on letter
mail -- the weight for which has declined over time -- guarantees Poste
Italiane a dominant position.
The market for packages is more competitive. According to
IBM, Poste Italiane has just 5 percent of the domestic package market.
Major players in the postal market include Dutch titan TNT
Post, which employs 1,800 workers in Italy and posted €147 million in revenue
in 2006. According to BT Global Services, TNT Express Italy is the market
leader for domestic and international parcel and package shipments in Italy.
Deutsche Post's various brands also maintain a presence in
the Italian market.
There are five significant players in the mail market, of
which Poste is by far the biggest. Poste Italiane has revenues more than three
times higher than its nearest competitor.
Non-Postal Services
Poste Italiane has been aggressive in diversifying its
business into markets more lucrative than traditional mail, even as it's
maintained its core mail obligations. It has invested substantially in
electronic infrastructure for banking, financial services and advanced business
logistics have. These efforts were undertaken in partnership with outside
firms, including such technology leaders
as Microsoft and Cisco.
Non-mail financial services compete directly with the
private sector.
More than half of Poste Italiane's revenues come from
financial services and insurance. Traditional mail accounts for less than a
third of total revenues. It's clear that Poste Italiane's management is
"betting on banking," as IBM's postal analysts put it in 2006.
So far, the global financial crisis has contained some good
news for Poste Italiane. Money has poured into Poste Italiane’s banking unit,
which Italian savers regard as a safe alternative to the country’s endangered
commercial banks. The postal bank only invests in state bonds. In October 2008,
purchases of postal savings certificates were almost 300 percent higher than in
September, while Italian mutual funds suffered massive withdrawals. Deposits to
postal savings accounts jumped 112 percent in October 2008 compared to the
previous month.
Today, Poste Italiane manages €340 billion of savings in
more than 5 million accounts. With such assets, Poste Italiane is one of the
largest savings banks in Italy.
Its investment arm, Fondi Bancoposta Sgr, handles €3.3
billion.
A further €29 billion of savings and deposits is managed
through Poste Vita, the national post's insurance company. Poste Vita is the
largest life insurance company in Italy.
In 2003, Poste Italiane introduced PostePay, which is now
the most widely used prepaid credit card in Europe.
Poste Italiane has recently moved into wireless telephony
with its “virtual” telephone company Poste Mobile.
As
of December 2008, 630,000 customers have bought Poste Mobile SIM cards for their
phones. Poste Mobile also has tapped into the market for payment systems by
phone.
In a partnership with Italy’s National Railway System in
2008, Poste Italiane set up Italia Logistica, a nationwide business logistics
operation.
Notably, in the course of these modernization and expansion
initiatives, Poste Italiane units have not been spun off.
Future of Poste Italiane
From 2002 through 2007, Poste Italiane reported six
consecutive years of profits.
Poste's management has bet heavily on financial services as
the engine of growth for the organization. Some commentators question whether
will be able to maintain its dense network of post offices into the future,
particularly as consumers move online to conduct their financial operations.
Poste Italiane continues to venture into new fields where it
essentially competes with private-sector providers. Its mail operations have
benefited from the profits borne by non-mail operations.
Such cross-subsidies have helped modernize and maintain the
mail sector. For example, all Italian postmen will soon be provided with mobile
devices to track mail status and deliveries.
In 2008, Standard & Poor’s listed Poste Italiane as one
of the top candidates for “final” liberalization. Indeed, there were reports in
June 2008 that the Italian government was considering a further privatization
of certain state-owned companies, including Poste Italiane. But the credit
collapse has put such plans in doubt.
In Italy’s
“mixed” economy, the government has traditionally played a large role. Given
the current economic environment, the “safety” of Poste Italiane’s financial
conglomerate grants the state postal monopoly great advantage over private-sector
firms engaged in everything from financial services to communications to
package delivery.
